The justice secretary, Jack Straw, has said he hopes to save legislation to cut the size of the "no win no fee" deals used by libel lawyers before the impending general election.

On Tuesday night the plans fell victim to a rebellion as four Labour MPs joined opposition parties in voting against the order on a Commons committee.

Straw said yesterday that "a lot of misinformation" may have led to the Commons first delegated legislation committee voting down the order, which would reduce the "success fees" charged by lawyers operating on a "no win no fee" basis in defamation cases from 100% to 10%. He added that he remained "hopeful" of securing the reform before the general election.

Straw said the order would go to the Commons on Tuesday. "It's on the order paper for next Tuesday. I am hopeful – I have got to talk to our whips and the opposition whips.

"I think there was quite a lot of misinformation about it and what they were arguing is if the maximum bonuses from winning a defamation action was cut from 100% to 10%, defamation lawyers would refuse to act.

"The 10% figure was not plucked out of thin air, it was done on the basis of some quite sophisticated calculations. What I am saying is, whether it's 100% or 10% does not make that much difference to the finances of the very big national and international media chains, but what it affects is local papers."

The MPs, including Labour's Tom Watson, argued the move could deny access to justice to people of modest means who felt they had been libelled but may be unable to find lawyers willing to take on their case.

Campaigners for libel reform are concerned the issue may now be kicked into the long grass as the dissolution of parliament approaches ahead of a 6 May general election.

Straw said there was still a chance of getting the legislation through before an election.

The conditional fee agreements (amendment) order is contained in a statutory instrument, which can pass through parliament without a vote in the Commons or the Lords and is often nodded through by committee.

But four Labour MPs joined three Conservatives and two Liberal Democrats on the first delegated legislation committee to vote it down.

Watson, the Labour MP for West Bromwich East, who voted against the libel reform, said more consultation was needed with the legal profession.

"I have consistently supported reforms of the libel system. It is right we drive costs of cases down, but this proposal would deny access to many thousands of people," he said.

Chris Mullin, Labour MP for Sunderland South, who also voted against the order, said: "The impact would be that lawyers wouldn't touch difficult cases any more. Nobody was suggesting that it should be 100%. I think people want to see a happy medium."

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